PTB dissolution may hurt tobacco industry

The federal government's decision to dissolve the Pakistan Tobacco Board (PTB) and hand over the regulatory authority to provincial governments has sparked controversy, which may have severe economic, social and regulatory consequences.

"The PTB has played a pivotal role in regulating tobacco production and the industry under a centralised system that benefits all stakeholders, including farmers and the legal tobacco sector," remarked Osama Siddiqui, a macroeconomic expert.

He added that the dismantling of the system could lead to a surge in illegal tobacco cultivation and sales, which would undermine the legal industry. One of the PTB's critical contributions has been ensuring fair prices for tobacco farmers, especially in Khyber-Pakhtunkhwa (K-P), where the majority of Pakistan's tobacco is produced. By maintaining a balance between supply and demand, the PTB has safeguarded farmers' interests, providing them with a stable income.

The expert fears that provincial governments lack the capacity to manage this responsibility effectively.

Without the PTB's oversight, the farmers could face financial hardships due to falling prices and market instability. A decline in tobacco production will deprive the farmers of their livelihoods and leave them vulnerable to exploitation.

The PTB's centralised regulation has also fueled growth in tobacco exports, which increased from $42 million in 2019-20 to $108 million by the end of 2024. Additionally, legal tobacco sales have made a substantial contribution to the national treasury by generating Rs237 billion in revenue in FY25 through the federal excise duty and sales tax.